The Digital Skeptic: Facebook's Retail Faceplant

Tuesday

May 29, 2012 at 12:01 AMMay 29, 2012 at 5:11 PM

Facebook won't be the place for retailers until the funny money, barriers to entry and creep factor go away.

Jonathan Blum

NEW YORK (TheStreet) -- My question to Facebook(:FB) investors is a simple one: Have any of you actually used the thing to make money? Not make friends. Or be liked. Or play the markets. But, you know, earn real cash selling a real thing to a real person.

We have. And not just once. Many times. For like a year. My writing buddy Anthony Mowl tried to sell women's apparel on Mark Zuckerberg's brainchild. Yes, Anthony wanted the money, but as a journalist and salesman, he was also testing the retail worthiness of the Web giant.
Facebook won't be the place for retailers until the funny money, barriers to entry and creep factor go away.

How did this newly minted public company do as a retail sales tool? I will leave those words to Mr. Mowl: "It sucked on so many levels."

Here's why:

Facebook's "company store" feels like we're back on the retail plantation.
The retail cluelessness of Facebook is stunning. The operation has the hubris to be not merely content with taking a cut of what it sells but to steer users toward shopping with a company scrip called "Facebook Credits." Most folks use these credits to buy virtual goods. Say, an improved tractor on games such as FarmVille or upgrades to The Sims Social. (Side note: Is there anything sadder, really, than spending real money on a fake tractor?) But less well known is that customers can also use credits to buy goods from some Facebook retail outlets. The experience was like shopping with casino chips, except worse, since it sets up unnecessary steps in the retail process -- steps click-averse consumers clearly had no patience for in our testing.

Whoever came up the idea that dollars were not good enough for Facebook needs a big, long executive timeout.

Facebook retail apps kill -- and not in a good way.
Facebook often requires using specific bits of software to conduct business. These apps have cute sounding names. The one we used, called Payvment, boasts that you can "shop now." But what it really does is make people shop "not now." In our testing Payvment turned out to be basic recommendation, shopping cart and check-out tool. PayPal, which is nothing to write to the retail home about, is far better. And Facebook still managed to throw up yet more sales roadblocks. For starters -- get ready for this one -- anyone who wanted to even browse our store, much less buy, had to install the Payvment app on their own Facebook profiles. Which was both another multiclick process and a spam producer. The thing threw up wall posts such as "Anthony installed the Payvment app."

It was almost as if Facebook went out of its way to make it difficult for us to get paid.

Facebook's "everyone sees all" vibe violates the one-to-one retail relationship.
It gets worse: Shopping on Facebook makes an open-air bazaar feel like a private haute couture boutique. The company deserves credit for defusing some past social retail debacles -- remember the poor sap who bought an engagement ring for his girlfriend and Facebook advertised the news directly to his girlfriend?

That nonsense no longer happens. But we found the company's buying process to be eerily exposed. Particularly with the new timeline layout and the contrasting rules between "friends" on personal pages and "likes" on company pages, we were terribly concerned that the deal one customer got was somehow leaking to another.

That kind of speaking out of retail turn is a deal killer.

The fabric of the Web unravels.
The grim investor big think therefore goes like this: While Facebook will certainly remain the ultimate destination to post photos of new clothes, it's unlikely to be the place to sell those clothes until the funny money, barriers to entry and creep factor go away.

But the issues raised by a bumbling retail sales strategy are far darker. Even the Web's biggest companies are finding it brutally tough to extend into new markets, and after five years of trying Facebook remains stubbornly stuck in the "business" of charging nothing for connecting hundreds of millions of users. Which in turn makes investors yet again face the core valuation fib of the Internet -- that scale somehow turns magically to profits.

The idea that getting lots of users first and "monetizing" those users after the fact is as nutty now as it was 15 years ago, when we all bought into the Web's pump-and-dump investment culture.

Try selling women's bathing clothing on Facebook and you'll see -- the fabric of the Web is unraveling.

With additional reporting by Anthony Mowl.

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